Any entrepreneur can come up with a great product idea. But does any entrepreneur have the financial resources and legal clout to protect their idea if it does gain traction in a large market? Hardly.
While innovative ideas are a dime and dozen, those that do gain traction get the attention of bigger companies with more resources and connections to bring that idea to fruition. Usually what happens is that companies buy these ideas off those that thought of them, and publicly take all the credit (and revenue) for bringing that idea to market. Sometimes, a company might outright copy or steal an idea if the individual did not take the steps to protect their intellectual property rights.
This happens regularly in the e-commerce world of order fulfillment. For example, someone might have come up with a great idea and started to make real money using Fulfillment by Amazon services. Other businesses might take notice, copy that idea, and start undercutting the original seller, sending margins into a death spiral until the individual that originally came up with the idea could no longer turn a profit.
So what can we do to prevent this from happening? How can we better protect intellectual property rights?
Given that the U.S. Patent and Trademark Office (USPTO) receives 440,000 trademark applications each year, it’s not enough to simply apply for a trademark, patent, or a copyright. First, USPTO can only enforce IP rights within the borders of the U.S. Second, the digital revolution has distorted the entire process of securing IP rights to an idea, so until IP law catches up to today’s technology, there needs to be another solution that provides indisputable proof that an individual is the original owner of an idea.
When someone comes up with a new product idea, he could submit it to a globally distributed ledger with a date and time stamp. Since all data in the distributed ledger is tamper-proof and cannot be altered, no one else in the world can claim—and prove—that they came up with the same idea first. Such distributed ledger technology is also known as ‘blockchain’.
Using a globally accessible blockchain can help minimize infringement while providing an electronic chain of custody for every piece of intellectual property. The consumer market can then see the value of any particular work or product, which the USPTO seems to be incapable of through its traditional application process.
Smart Contracts to Enforce IP Ownership
Blockchain technology also takes it a step further. Not only can a business document IP ownership of an idea, product, patent, or digital asset, but they can also use smart contracts to enforce licensing agreements.
Not to be confused with a legal contract, a smart contract contains a set of predefined rules agreed by all parties interacting with each other. These predefined terms and conditions are digitally coded on top of the blockchain. When these terms have been met by all parties, the smart contract is automatically executed through its own code.
Using smart contracts, blockchain can help enforce intellectual property rights across all borders in the new digital revolution without having to rely on outdated legal systems.
With supply chains crossing multiple borders, manufacturers can protect their reputations among small business entrepreneurs by ensuring that they get rewarded as original and legal owners of new product ideas. With a stronger IP protection system that isn’t considered archaic, manufacturers stand to gain by catering to a growing entrepreneur and small business community that has previously been shut out by bigger companies.